Airbnb asks for a bailout and Toronto is not having it

As Airbnb hosts continue to experience loss of income due to the worldwide impact of COVID-19, the company has reportedly petitioned the federal government to help provide relief measures for its hosts. According to ThinkPol, Alex Dagg, Airbnb Canada’s public policy director, wrote a letter to Canada’s Deputy Prime Minister Chrystia Freeland on March 17, with a list of requests for struggling Airbnb hosts.

“We ask that you consider measures to support these entrepreneurs and we have identified some recommendations for how to do so,” Dagg requested.

Among the six relief measures, the company would like a sales tax relief for hosts—a temporary waiver of the obligation for hosts above the $30,000 threshold to charge, collect and remit GST/HST, while still allowing them to claim credits for their inputs.

“Accommodation would not be subject to GST/HST, but the host community could still get credits for the GST/HST paid on their business expenses,” the letter states, referring to this type of tax treatment as “zero-rating,” something, Dagg notes, that already exists for certain suppliers “and would be both effective and relatively straightforward to implement.”

The other measures include: 

  • An income tax rate—an overall rate reduction for Canadian-controlled homes and experience hosts who generate income from the tourism industry below a given threshold. 
  • Regional development agency support “to support self-employed individuals engaged in short-term tourist rental and experience businesses.”
  • Employment Insurance benefits, as well as cancelling the 12-month waiting period before an individual can access these benefits.
  • Deferring federal taxation of income earned through short-term rental.
  • Transferable tax credits or federal funding on travel destination promotion and reinvestment for travel within the country “to re-accelerate travel to and within Canada”. 

Social media reaction, so far, seems to be heavily against any sort of bailouts for Airbnb hosts.

The logic is that many of these rentals might hit the regular long-term rental market and bring the price of rent down (particularly in Toronto, where the median rent for a one-bedroom jumped from $1,620 in February 2017 to $2,230 in March 2020, according to the Canadian Rent Report).

 

 

 

Although some believe the hosts deserve some sort of compensation—calling short-term rentals an “essential service” and state that Airbnb is “filling a demand” in the marketplace.

Airbnb, and other short-term rental companies, are facing unprecedented cancellations amid global travel bans. Condos in the GTA are getting strict on refusing them as a result of social distancing measures and concerns about the spread of COVID-19. In late March, for example, ICE condominiums at York St. and Lake Shore Blvd. W. and Maple Leaf Square condos on Bremner Blvd. decided to ban all short-term rentals during the pandemic. 

 

 

On Monday, Airbnb CEO Brian Chesky outlined further actions to support rental hosts through the COVID-19 crisis. These include paying $250 million to hosts to help cover the cost of COVID-19 cancellations, creating a $10 million “superhost relief fund,” primarily for hosts who rent out their own homes and need help paying their rent/mortgage, and making it easier for previous guests to send financial support directly to hosts.

“When your business suffers, our business suffers. We know that right now many of you are struggling, and what you need are actions from us to help, not just words,” Chesky wrote in his statement, ending it somewhat hopeful. “When travel comes back—and it will—we look forward to welcoming millions of guests together again.”

 

Article exclusive to STREETS OF TORONTO